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For therapy biz, the first step in expansion: Research

Photo by COURTESY OF THE RECOVERY PROJECT
Polly Swingle helped Charles Parkhill come back from a spinal cord injury. Today, they're in business together as The Recovery Project and facing the challenge of how to expand into new markets.

The Recovery Project LLC

Location: Livonia

Description: Physical and occupational therapy and training provider for people with traumatic brain and spinal cord injuries and other neurological disorders

Founders and co-CEOs: Charles Parkhill and Polly Swingle

Employees: 36

Revenue: $2.6 million in 2013; $3.5 million estimated in 2014

The Recovery Project LLC was born out of adversity. Its founders met when one of them, Charles Parkhill, injured his spinal cord when a wave hit him just the wrong way off a beach in Mexico in 1998, leaving him unable to move from the neck down.

He made progress working with a Detroit Medical Center physical therapist, Polly Swingle, and in 2003 the two formed the business to help others with traumatic brain and spinal cord injuries.

In 2005, Parkhill took his first unassisted steps since the accident — he now uses a wheelchair and can walk short distances. By 2012, the company had reached $2.3 million in revenue.

Problem: After some years in business, The Recovery Project faced more adversity, albeit of a more routine variety and one that all second-stage businesses face: the need to enter new markets to keep the enterprise growing. Parkhill and Swingle saw their business missing out on a big market in the elderly population.

"One obvious thing we recognized is the elderly population in the nation is growing," Swingle said. "What programs can we offer? What kind of revenue can we get from this?"

But their business, targeted at neurological problems as it was, couldn't just waltz into a new demographic and begin treatment on a new set of ailments. It lacked the connections or resources. The biggest hurdles would be developing and then marketing a new program.

Solution: Parkhill and Swingle did market research and identified treatment areas of need among the elderly — such as Parkinson's disease and fall prevention — and began building physical therapy programs around them.

For marketing, they targeted the areas surrounding the company's two locations — Livonia and Macomb Township — because their research suggested that elderly patients don't or can't drive far for physical therapy.

The Recovery Project reached out to providers of elderly care, and Swingle began speaking at senior centers and events having to do with elderly care.

The business structured its program to meet Medicare reimbursement requirements and to fall within the allowed number of annual patient visits — 14.

It also had to get staff up to speed. The treatment regimens for neurological patients involved equipment and routines for retraining the brain to perform certain functions again. Treatment of problems that come with age revolve around strength, flexibility, balance and cardiovascular functioning.

The Recovery Project hired two therapists and two support staff workers for the new undertaking, and 14 of the company's licensed therapists were trained on the guidelines of elderly treatment. Two therapists — Swingle one of them — attended a three-weekend training program in Chicago to gain special certifications in treating the elderly.

The program, launched in June 2013, fueled a 5 percent boost in revenue for the remainder of the year. Parkhill projects revenue this year of $3.5 million as the program fully gets rolling.

Risks and considerations: In their research, the owners didn't see many other clinics like theirs offering elderly physical therapy services, Parkhill said.

"Other people who fit our mold weren't doing it," he said. That made it risky to devote staff time and materials to the program, which so far has cost the business about $140,000 to build.

Licensed physical therapists — the kind Medicare demands — have seven-year degrees and corresponding salary expectations, Swingle said. And Medicare reimbursements in general lie in shifting terrain, adding to the risk of an elderly care program.

On the other hand, doing nothing is rarely an attractive strategy for a growing business, either. "The risk is if we didn't do something besides the aggressive neurological rehabilitation that we'd been doing," Parkhill said. "We need to do something else, or we're not going to grow."

Mark Lee

Expert opinion: When entering a new market segment, businesses shouldn't underestimate the need for research to make sure that a need or desire for the product or service exists, said Mark Lee, president of Lee Group MI LLC, a marketing consultancy in Plymouth. Otherwise, he said, money will be wasted.

"It's typically more expensive to get new customers than to retain existing ones," Lee said.

To mitigate the risk, he said, businesses need to make sure that they do the research and that the research plan is well thought out.

In one case, Lee saw a soft drink company's newest product pulled off shelves after six months. The problem wasn't that the company forgot to do market research. It just did it on the wrong people.

"It researched the existing audience and did not get opinions from the target audience it wanted to attract," Lee said.